Definition
Conversion Rate is the percentage of potential customers who complete a desired action out of the total number who had the opportunity to do so. In hotel distribution, booking conversion rate commonly measures the percentage of website visitors or booking-engine users who complete a reservation.
Formula
Booking Conversion Rate = (Number of Completed Bookings ÷ Number of Eligible Visitors or Sessions) × 100
The hotel should define the measurement basis clearly, because visitor-based and session-based conversion rates are not identical.
Practical Example
A hotel’s booking engine records 2,000 eligible sessions during a particular period. Visitors complete 60 reservations.
Booking Conversion Rate = (60 ÷ 2,000) × 100 = 3%
The booking conversion rate for this example is 3%.
How to Interpret Conversion Rate
A higher booking conversion rate generally indicates that a greater proportion of potential customers are completing reservations. However, conversion rate should be evaluated alongside traffic quality, average booking value, cancellation rates, and acquisition costs.
Hotels can improve conversion by simplifying the booking process, ensuring accurate rates and availability, optimizing mobile usability, communicating cancellation policies clearly, and providing a trustworthy booking experience.
Related Terms
Booking Engine · Direct Booking · Distribution Channel · OTA · ADR · Cancellation Rate · Revenue Management